Why pharma’s manufacturing supply chain needs blockchain innovation

Gunjan Bhardwaj

April 17, 2018

There are many challenges in the pharmaceutical supply chain, from maintaining quality to security issues. Can blockchain provide the end-to-end visibility needed?

It’s a good time for the pharmaceutical industry. Whether you’re a manufacturer of clinical trial materials or prescription medicines ready for pharmacy shelves, business has been booming. In fact, pharma has spent the last 30 years as a consistently top-performing industry.

Pharma businesses all along the supply chain, from research materials to drug manufacturing and sales, have achieved comfortable profits by holding fast to high quality and safety standards. But a recent decline in industry performance is causing companies to wonder what innovations are necessary to bring back rising revenues. Many of the problems could be considered the growing pains of an ever-expanding industry.

Many of these growing pains are found along the supply chain. Ingredients get lost, chemicals become inactive due to insufficient temperature control, medicines are wrongly prescribed by malfunctioning computer systems, and counterfeit medications slip through cracks in security. All of these problems are causing pharma companies to turn to emerging technologies to improve visibility and control across the supply chain. Many companies have begun to realise the specific utility of blockchain technology in this endeavour.

Blockchain is an electronic ledger technology that securely records transactions between parties in chronological order. Here are some of the reasons why blockchain holds such exciting promise for innovation within the pharmaceutical supply chain.

Envisioning a blockchain-powered supply chain

The pharmaceutical industry’s supply chain is vast and complex. Products are transferred along the chain from suppliers to manufacturers to distributors to re-packagers to retailers, changing hands many times in the process. The number of stakeholders involved makes it difficult to track any single product’s authenticity and integrity from the beginning of the chain to the end. This uncertainty negatively effects both revenues and public trust in the industry.

The complexity of the supply chain has left it vulnerable to the large and growing market of counterfeit drugs. To protect consumers, regulators have responded to the counterfeit drug problem by enforcing higher standards of transparency and traceability throughout the pharmaceutical supply chain. The integration of blockchain technology is one of the most promising ways that drug companies can ensure regulatory compliance, product integrity, and consumer trust.

In a blockchain-powered supply chain, a drug’s packaging could be scanned and verified at any point in the chain and whenever the drug changes hands between stakeholders. Only trusted, verified parties would be granted permission to add information to the blockchain’s record. All activity would be transparently shown in real time, without the lengthy delays often associated with legacy tracking software. At any given point, a quick scan of the product could pull up a full history of that product’s path along the supply chain. Any anomalies or lapses in supply chain integrity would be easily detected.

A blockchain-powered supply chain would include functionality for drug identification and verification, and would have the power to notify all relevant stakeholders whenever an illegitimate drug was found in the system or an unauthorised edit was made to the record. Under such a system, medications could be seamlessly transferred through a network of trusted parties – a network that is both transparent and totally secure.

Making this vision a reality

The potential benefits of blockchain integration range from improved data security to elevated regulatory compliance. But integrating blockchain into a system as truly global in scale as the pharmaceutical supply chain will not be easy. Companies exploring this technology must thoughtfully evaluate both the opportunities and challenges and must develop a robust understanding of the technology itself.

Some companies are already investigating practical applications of blockchain technology in the pharmaceutical industry. For example, cloud-based networks are being explored to make possible end-to-end visibility and seamless collaboration among supply chain stakeholders. The combination of such networks with decision-support applications is also being explored, in an effort to make use of the vast web of pharmaceutical data that is seldom used to its full potential. Innovations like these promise to elevate the pharmaceutical industry by increasing the availability of products, lowering static inventories, and boosting profit margins.

Before long, blockchain will become a core component of every major pharmaceutical operation. Once individual companies embrace the technology and learn to effectively utilise its strengths, they will begin working together to integrate blockchain solutions into supply chains and distribution networks on a global scale. Given the fast pace and increasing size of the pharmaceutical industry, such innovations will be even more essential in the near future than they are today.

About the author:

Gunjan Bhardwaj is the founder and CEO of Innoplexus, a leader in AI and analytics as a service for life science industries. With a background at Boston Consulting Group and Ernst & Young, he bridges the worlds of AI, consulting, and life science to drive innovation.